Consumer and Retail Industry Overview: Discount Retailers

Discount stores are comprised of companies that offer various items such as apparel, home decor, footwear usually at significant discounts from the full retail price. Industry prospects are tied with the purchasing power of the target consumers, which are low- to middle-income consumers. Discount retailers are able to provide customers with well-known brands while maintaining a wide diversity of brands and product offerings to satisfy personal consumer preferences. This industry tends to perform well in more challenging economic conditions as it holds an inverse relationship with disposable income. Profitability for these retailers rely upon maintaining competitive pricing, advantageous store location, increasing revenue per square foot and managing their supply chains.

The industry gained from the economic recession through the impact it had on consumer spending. The nature of the recession has caused more consumers to remain price conscious even in fairly good economic conditions. In the US, the industry is dominated by a handful of large players including Walmart, Target and TJ Maxx. To gain more market share, players are investing in developing omni-channel capabilities such as technological updates and store remodels. These combined with better pricing, effective inventory management, and merchandise and operational initiatives will be huge determinants in who can maintain or even grow their place in the market. This competition is only exacerbated by Amazon and current players must establish new initiatives such as online capabilities.